ROGER EGLIN describes how British Leyland confounded its critics.
BRITISH LEYLAND executives aren’t throwing their hats into the air. But as their financial year ends this week, they are walking around with the confident smiles of men who have confounded their critics. Throughout the first eight months of this year, the company’s share of the United Kingdom car market has averaged 41.14 per cent, more than its three American – owned competitors – Ford, Chrysler and Vauxhall – have achieved between them.
In the same period, BL sold 352,800 cars, a handsome increase of 61,094 on the same period of 1970, while total car output at 574,200 was up 14 per cent. In the group’s last really good year, in 1969, when pre-tax profits reached £40.4 million, car output was 869,000 units. Abroad, helped by the unstoppable Mini, exports ran 15.2 per cent up through the first seven months of the year.
‘They look very good,’ smiles Filmer Paradise, sales director of BL’s mass car division, Austin- Morris.
By 1975 European sales should reach 500,000 – double the present ievel. Paradise, American and a rich man in his own right, has plenty to smile about. Drawing on his customary cigar, he can sit and tick off BL’s more obvious successes. The Marina is a winner. Up to sixth place in the car market, production is now running just below 3,000 a week, with a target of 3,500 by the start of November.
The lame duck Maxi has taken wings and like the 1800, production cannot keep up with sales. The evergreen Mini, now in its twelfth year, and becoming increasingly profitable, is still the second-best seller in the British market after the 1100/1300. The BL range, an ageing rag bag of cars following the merger with BMC has a new look after the pruning of cars like the Morris Minor, Triumph Herald and the elderly Austin Cambridge family.
Austin – Morris division, which lost £16 million last year andaccounts for 40 per cent of BL’s sales, is back in the black and steaming ahead. In the first eight months of this year it surpassed its sales budget by 21,163 cars. No one at BL denies the advantage that Ford’s 10 week strike gave them.
But the foundations of a comeback were laid before then. At the start of the year, Paradise, supported by a much-improved market forecasting team, took the calculated risk of stepping up production and stocks. Indeed, at one stage, Paradise admits that BL had more stock in hand than the rest of the industry put together. He was convinced, however, that no Government could allow such a key industry as cars to slip any further into recession. Thus BL was better placed than any of its competitors to take advantage of both the Ford strike and the July purchase tax cuts. Paradise shrugs off competitors who claim it was a risky gamble:
‘A guy who gets nervous should get the hell out. We had to drive for home sales and you can’t target from scarcity.’
Buttressed by the availability of stock, BL’s market share has also stood rock solid in the face of the upsurge in imported cars, which took 22 per cent of the market last month. Much of Paradise’s confidence as stocks accumulated, also stemmed from his conviction that BL is now as good at selling its products as anyone in the business. The sales team at Austin-Morris was revamped from top to bottom, with what Paradise calls the ‘executive deadwood’ going.
‘ We lost 32 high people as generously and gracefully as possible.’
BMC’s sales philosophy was crudely simple – the more outlets there were, the more cars that were sold. But this created wasteful competition between BMC dealers and failed to provide the level of sales throughput to justify expansion or investment by dealers and distributors. Now the number of franchises available has been cut to two from five ; the number of dealers slashed from 5,000 to 3,900 ; and the distributor chain has been reduced from 500 to 460. Salesmen have been decentralised into regional offices; the dealer and distribution network retrained ; and promotions and advertising carefully targeted and analysed.
‘We don’t want to dance around in a frenzy of new ideas.’ he says.
There is even a two-man team watching for every opportunity to slip a car into a joint promotion with manufacturers from other industries–television ad-girl with new hairspray steps from gleaming Marina, for instance. Paradise is especially pleased to have confounded the competition with that particular car. To a man, they expected it to poach sales from the existing 1100/1300 cars. But his analysts insisted it wouldn’t. Now, while the Marina is running around 5 per cent of the market, the 1100/1300 range are still top sellers with a shade over 10 per cent – and this despite the fact that they are now sold only by the Austin arm of the sales network.
‘The Marina is doing precisely what it is meant to do – taking fleet sales off our competitors,’ says Paradise.
More still is expected from the Marina when it makes its European debut next month. Equally important is the transformation of the A-M division from production to sales orientation. By what Paradise calls ‘product refinement ‘ – which really means paying rather more attention to what the customer wants than did BMC engineers – a new saleable gloss has been added to cars like the Maxi, 1800, and particularly the Mini.
Much of the refinement camouflages the fact that the turn-around has been achieved with the help of only one wholly new model, the Marina.
‘ Now we have the wonderful combination of basic strength with new cars to come as the industry moves in to a period of boom,’ says Paradise.
Whilst both Rover and Jaguar are moving from strength to strength, with output 25 per cent up, the Triumph division is still the Achilles heel of the group and is not making a profit. This largely reflects the disparate progress that has been made in tackling the group ‘s industrial relations, problems. Under personnel director Pat Lowry great strides have been made, especially at Cowley, where the Marina is produced, in eliminating the old piecework payment system. This was a constant source of haggling and creeping inflation. The system still exists at Jaguar but is much less of a problem there than at Triumph. BL is preparing to take a new initiative at Triumph in an attempt to improve relations. Lowry, however, is pleased about progress elsewhere in the group.
‘The signs are encouraging,’ he says.
But throughout BL, there is an acute awareness that continued progress in this field is critical. It’s no good having the right cars if you can’t make them. Given stability here. BL seems poised on the verge of great things. The last year has seen a considerable shift in the balance of power within the car ind ustry ; where Ford once called me tune, British Leyland now holds the upper hand. There is a growing feeling within the industry that Ford’s forecasters have pressed the wrong button and taken the car range too far upmarket and the about-to-be launched new model only accentuates this trend.
Even regardless of this, Ford itself says that its output and stocks won’t be back to acceptable levels until the start of 1972. This means Ford has been badly wrong-footed on the eve of what nearly all reckon will be the industry’s bestever year. Since the industry’s last record year of 1964, the brakes have been on in one form or another, but there will be bitter disappointment within the industry if 1972 sales don’t set a new high. But at BL, for the moment at least, there is contentment in reviewing this year’s progress. It will be a surprise if profits aren’t well on the healthy side of £20 million.